Citigroup Inc.

Revisions to the Earnings-per-Share CalculationIn June 2008, the FASB issued FSP EITF 03-6-1, “Determining WhetherInstruments Granted in Share-Based Payment Transactions are ParticipatingSecurities” (now incorporated into ASC 260-10-45-59A, Earnings PerShare: Participating Securities and the Two-Class Method). Under the FSP,unvested share-based payment awards that contain nonforfeitable rights todividends are considered to be a separate class of common stock and includedin the EPS calculation using the “two-class method.” Citigroup’s restrictedand deferred share awards meet the definition of a participating security. Inaccordance with the FSP, restricted and deferred shares are now included as aseparate class of common stock in the basic and diluted EPS calculation.The following table shows the effect of adopting the FSP on Citigroup’sbasic and diluted EPS:2010 2009 2008Basic earnings per shareAs reported N/A N/A $(5.59)Two-class method $0.36 $(0.80) (5.63)Diluted earnings per share (1)As reported N/A N/A (5.59)Two-class method 0.35 (0.80) (5.63)(1) Diluted EPS is the same as Basic EPS in 2009 and 2008 due to the net loss available to commonshareholders. Using actual diluted shares would result in anti-dilution.N/A Not applicableFair Value Disclosures About Pension Plan AssetsIn December 2008, the FASB issued FSP FAS 132(R)-1, Employers’Disclosures about Pensions and Other Postretirement Benefit Plan Assets(now incorporated into ASC 715-20-50, Compensation and Benefits—Disclosure). This FSP requires that more detailed information about planassets be disclosed on an annual basis. Citigroup is required to separate planassets into the three fair value hierarchy levels and provide a roll-forward ofthe changes in fair value of plan assets classified as Level 3.The disclosures about plan assets required by this FSP are effective forfiscal years ending after December 15, 2009, but have no effect on theConsolidated Balance Sheet or Statement of Income.Additional Disclosures for Derivative InstrumentsIn March 2008, the FASB issued SFAS No. 161, Disclosures about DerivativeInstruments and Hedging Activities, an Amendment to SFAS 133(now incorporated into ASC 815-10-50, Derivatives and Hedging—Disclosure). The Standard requires enhanced disclosures about derivativeinstruments and hedged items that are accounted for under ASC 815 relatedinterpretations. The Standard is effective for all of the Company’s interimand annual financial statements beginning with the first quarter of 2009.The Standard expands the disclosure requirements for derivatives and hedgeditems and has no impact on how Citigroup accounts for these instruments.Determining Whether an Instrument (or EmbeddedFeature) Is Indexed to an Entity’s Own StockDerivative contracts on a company’s own stock may be accounted for asequity instruments, rather than as assets and liabilities, only if they are bothindexed solely to the company’s stock and settleable in shares.In June 2008, the FASB ratified the consensus reached by the EITF onIssue 07-5, “Determining Whether an Instrument (or Embedded Feature)Is Indexed to an Entity’s Own Stock” (Issue 07-5) (now ASC 815-40-15-5, Derivatives and Hedging: Evaluating Whether an Instrumentis Considered Indexed to an Entity’s Own Stock). An instrument (orembedded feature) would not be considered indexed to an entity’s own stockif its settlement amount is affected by variables other than those used todetermine the fair value of a “plain vanilla” option or forward contract onequity shares, or if the instrument contains a feature (such as a leveragefactor) that increases exposure to those variables. An equity-linked financialinstrument (or embedded feature) would not be considered indexed to theentity’s own stock if the strike price is denominated in a currency other thanthe issuer’s functional currency.This issue was effective for Citigroup on January 1, 2009 and did not havea material impact.Equity Method Investment Accounting ConsiderationsIn November 2008, the FASB ratified the consensus reached by the EITF onIssue 08-6, “Equity Method Investment Accounting Considerations” (Issue08-6) (now ASC 323-10, Investments—Equity Method and Joint Ventures).An entity shall measure its equity method investment initially at cost. Anyother-than-temporary impairment of an equity method investment shouldbe recognized in accordance with Opinion 18. An equity method investorshall not separately test an investee’s underlying assets for impairment.Share issuance by an investee shall be accounted for as if the equity methodinvestor had sold a proportionate share of its investment, with a gain or lossrecognized in earnings.This issue was effective for Citigroup on January 1, 2009, and did not havea material impact.175